parents gift

MikMikandThriceMik

Hard to figure out parents gifting so I am asking here.

If my 2 parents were to gift me and my brother £7000 each within two years and then gift us more in the third year, are we liable for tax @ 40% on the whole amount or only on any excess above the gifting amounts?

Thanks.

MallyGirl

you don't pay tax on gifts. If your parents were to die in the next 7 (I think) years then there might be inheritance tax implications though

Mojisola

If your parents aren't likely to pay inheritance tax, there's no tax to consider.

Your parents can both give away £3000 a year (and they can use last year's allowance if they didn't give any away then) without inheritance tax becoming an issue.

MikMikandThriceMik

Yeh I know that, and the taper, so fearing the worst if my parents pass away within a year or two, what are the tax implications?

Mojisola

MikMikandThriceMik wrote: »

Yeh I know that, and the taper, so fearing the worst if my parents pass away within a year or two, what are the tax implications?

If their estates are liable for IHT, the executors will have to include the gifts and pay the tax before distributing the estate.

PeacefulWaters

There's a "Cutting Tax" section which might be a better place to post.

MikMikandThriceMik

Wasn't sure where to put this question, so I landed here.
This is why it is so confusing. Are my brother and I liable to get a tax bill when my parents pass, for the money they give us, if it is above the £12000 in the two years, even if the estate doesn't meet the threshold?
Thanks very much for bearing with me about this.

Mojisola

MikMikandThriceMik wrote: »

Wasn't sure where to put this question, so I landed here.
This is why it is so confusing. Are my brother and I liable to get a tax bill when my parents pass, for the money they give us, if it is above the £12000 in the two years, even if the estate doesn't meet the threshold?

If your parents' estates aren't big enough to pay IHT, there will be nothing to pay on the gifts you have received.

If the estates are large enough and there is IHT to pay, the executors will pay it out of the estate.

MikMikandThriceMik

Thank you very much for your answers.

Keep_pedalling

Mojisola wrote: »

If your parents' estates aren't big enough to pay IHT, there will be nothing to pay on the gifts you have received.

If the estates are large enough and there is IHT to pay, the executors will pay it out of the estate.

Your parents have a combined nil rate band of £650,000, it you are also going to leave you a house they also have £100,000 of primary residence nil rate band to use, meaning they can leave £850,000 tax free. This is going to rise to £1M by 2020 so unless their estate is over that sort of level then IHT is not an issue.

If on the other hand it is they should be actively look at planning for that.

Shakin_Steve

At the other end of the scale, if your parents were gifting you their last pennies and then had to go into care in a couple of years, you could be chased for care home costs.